IRS says audits of conservative groups out of line

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WASHINGTON — The Internal Revenue Service apologized to Tea Party movement groups and other conservative organizations Friday for what it now says were overzealous audits of their applications for tax-exempt status.

Lois Lerner, the director of the IRS division that oversees tax-exempt groups, acknowledged that the agency had singled out nonprofit applicants with the terms ‘‘Tea Party’’ or ‘‘patriots’’ in their titles in an effort to respond to a surge in applications for tax-exempt status between 2010 and 2012.

Republicans seized on the acknowledgment, demanding more information and adding it to a growing list of steps by the Obama administration that they say prove political interference, from allegedly hiding the terrorist origins of the attack in Benghazi, Libya, to the demand for disclosure of donors to conservative super PACs.

Senator Mitch McConnell of Kentucky, the Republican leader, called for ‘‘a transparent, governmentwide review aimed at assuring the American people that these thuggish practices are not underway at the IRS or elsewhere in the administration against anyone, regardless of their political views.’’

The apology and the ensuing reaction could be a turning point for the IRS, which has been caught between congressional Democrats pressing the agency to protect tax-exempt status more aggressively from overtly political groups and conservative groups claiming harassment.

Campaign finance watchdogs have said for years that 501(c)(4) tax exemptions were widely abused by conservative and liberal groups whose primary purpose is to influence elections, not to promote ‘‘social welfare,’’ as tax-exempt status mandates.

But Lerner said the examinations of the Tea Party groups were not a response to such pressure. She portrayed it more as a bureaucratic mix-up. Between 2010 and 2012, applications for 501(c)(4) tax exemptions nearly doubled, to more than 2,400. As the agency has done in the past, it centralized the processing of the surge at its Cincinnati office, where about 300 were flagged for further examination.

Staff members at that office singled out the terms ‘‘Tea Party’’ and ‘‘patriot,’’ she said, but not out of political bias; it was ‘‘just their shortcut.’’ Only about a quarter of the 300 cases flagged for scrutiny were Tea Party movement-related, she said, but she called the singling out of those groups ‘‘absolutely inappropriate and not the way we should do things.’’

Lerner indicated that no disciplinary action had been taken against the low-level employees she said were responsible; when pressed, she said she could not comment on such personnel matters. She said, however, that policy changes had been made to ensure that similar episodes would not happen again.

To the conservative groups and their defenders, the acknowledgment confirmed their worst accusations. In early 2012, numerous Tea Party-affiliated groups came forward to charge the IRS with harassment for demanding that they fill out extensive — and intrusive — questionnaires before their tax-exempt applications could be approved. The questionnaires demanded detailed membership lists, donors, contact information, logs of activities, and other information about the groups’ intentions.

Many of those groups found representation with the conservative American Center for Law and Justice and its outspoken lead lawyer, Jay Sekulow, who accused the IRS of ‘‘McCarthyism’’ intended to stifle conservative speech. The center called the apology ‘‘a significant victory for free speech.’’

Organizations that had been pressing for more aggressive enforcement of tax-exemption laws reacted with alarm. Lisa Gilbert, the director of Public Citizen’s Congress Watch division, said the IRS should not be targeting any particular political ideology. She said, however, that questioning applicants for tax exemption to determine whether they were primarily political was entirely proper and should be more widely pursued.

Last year, Senate Democrats began pressing the IRS to target such groups more aggressively. As the Tea Party questionnaires surfaced, the agency released a statement that said, ‘‘To be tax-exempt as a social welfare organization . . . , an organization must be primarily engaged in the promotion of social welfare. [That] does not include . . . intervention in political campaigns.’’

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